Parliament Passes 1997 Budget After Seven Months of Wrangling L a Z A

INSIDE: • Analysis: Why NATO should invite Ukraine — page 2. • G-7 earmarks funds for Chornobyl; Udovenko reacts — page 3. • Ukrainian Embassy celebrates anniversary of Constitution — page 5. HE KRAINI A N EEKLY T PublishedU by the Ukrainian National Association Inc., a fraternal non-profitW association Vol. LXV No. 27 THE UKRAINIAN WEEKLY SUNDAY, JULY 6, 1997 $1.25/$2 in Ukraine Parliament passes 1997 budget L a z a r e n ko resigns as prime minister after seven months of wrangling by Roman Woronowycz withdrawn. The IMF had stated that one Kyiv Press Bureau of the central conditions for the granting of the loan was the passage of a budget KYIV — The Verkhovna Rada with a deficit of under 6 percent. They approved a 1997 budget on June 27, also demanded that Ukraine reform its seven months after it was presented to tax system, improve the efficiency of the the legislature for review. tax collection process and keep inflation The budget bill passed by a vote of 229 below 25 percent in 1997. Of the 41 to 71, ending a process that had reached a requirements, Ukraine has thus far ful- point where simply to have a budget had filled 27, including a lowered inflation become the criteria for success. rate and, now, a budget. President Leonid Kuchma, speaking in It is not clear that the IMF will accept New York two days before the budget was the amputated tax package. Originally authorized, told Interfax-Ukraine, “It’s as seven tax reform bills were submitted by if the lawmakers are attending to the bud- the government for Verkhovna Rada get according to the saying ‘anything for a approval. After much political haggling quiet life.’ ” He added that he did not need only two, a value added tax of 20 percent “a budget for the sake of a budget.” and a corporate tax law, which removed The national deputies endorsed a revenue tax incentives to foreign investors (not package that gives the government 22.4 bil- what the IMF wanted), was approved. lion hrv and approved budget expenditures One Verkhovna Rada deputy who was of 28.1 billion hrv, which will produce a 5.7 involved in the failed attempt to push percent deficit of 5.7 billion hrv against the through the full tax package said that in Khristina Lew gross domestic product, but 20.3 percent the end, the budget, in whatever form or against government expenditures. Pavlo Lazarenko (right) meets with IMF Managing Director Michel Camdessus in shape, was passed only for Ukraine to Washington shortly after being confirmed as Ukraine’s prime minister in July 1996. The budget identifies several sources have something to show the IMF. for financing the deficit: domestic bor- Commenting a day before the budget went by Roman Woronowycz president would only remark that, “The rowing will cover 3.34 billion hrv, while through its third and final reading, Yurii Kyiv Press Bureau resignation is accepted, and the decree foreign credits have been lined up to the Tykhanurov of the Social-Market Choice will be signed today.” tune of 2.4 billion hrv. faction said, “It will be merely a piece of KYIV — Ukraine’s ailing prime min- Mr. Lazarenko conferred with his Many believe that what gave impetus paper. It is being done for the IMF.” After ister, physically suffering from a circula- closest aides on July 1, according to to the final drive to approve the budget the budget was passed, he was even more tory ailment and politically from accusa- Interfax-Ukraine, before drawing up a was a threat that hung over the govern- blatant in his criticism. “It is an impossi- tions of corruption and moral bankrupt- letter to President Kuchma in which he ment and the legislature that if the budget ble budget. It is a bad budget.” cy, resigned on July 1. requested leave from government was not approved before July 1, when the Other national deputies were of a like President Leonid Kuchma accepted because of the need to undergo two-and- International Monetary Fund began a mind. Oleksander Lavrynovych of the the resignation of Ukraine’s head of gov- a-half to three months of medical treat- review of Ukraine’s economic progress Rukh faction said, “What can I say about a ernment the following morning. At a ment, which would leave him unable to in Kyiv, that a promise of nearly $3 bil- press conference with visiting Czech continue his duties. lion in economic reform loans would be (Continued on page 12) President Vaclav Havel on July 2, the Mr. Lazarenko has been diagnosed with thrombophlebitis, at times a life- threatening ailment, and inflamed vari- cose veins. He is undergoing treatment at Kuchma presents reform plan at Constitution Day celebrations Republican Clinical Hospital in Kyiv. by Roman Woronowycz mark the first anniversary of the adoption backs between the branches of power.” Doctors have not yet ruled out the possi- Kyiv Press Bureau of Ukraine’s Constitution on June 28, He also suggested that in cases involv- bility that surgery may be necessary. 1 9 9 6 . ing corruption and abuse of office the For two months a movement to oust KYIV — President Leonid Kuchma He chose to emphasis Ukraine’s many Verkhovna Rada should cancel the immu- the controversial prime minister had presented an extensive plan for shortcomings rather than its achieve- nity from prosecution that national been building, led by the National reforming government and restarting m e n t s . deputies enjoy. “It would be a display of Democratic Party but also including the economic reforms on June 27 in a The president accused the Cabinet of patriotism and a striving for purity of the Reform and Constitutional factions in major policy address at a celebration Ministers of “accelerating the shadowing political powers,” remarked President Ukraine’s Verkhovna Rada. that marked the first anniversary of of the economy” and the Parliament for Kuchma. He said that one out of every six Appointed for his perceived organiza- Ukraine’s Constitution. “excessive politicizing.” He explained that people charged with corruption is a mem- tional abilities and his influence in monied circles in both Ukraine and In a speech that was filled with candid the Cabinet of Ministers had done little to ber of Parliament. Russia, which President Kuchma hoped language and critical assessments, the promote a more favorable investment cli- Addressing the drawn out budget could be used to complete economic president also proposed that the legislature mate in Ukraine and to spur the emer- process of 1997, the president offered a reforms and get the economy moving, vote to postpone by one year parliamen- gence of legitimate businesses willing to plan to avoid a repeat in 1998. He sug- tary elections scheduled for 1998. pay taxes. Mr. Lazarenko had been at odds with gested that the Verkhovna Rada and the President Kuchma almost since day one. Earlier on June 27, the 1997 budget The Verkhovna Rada, he said, was Cabinet of Ministers sign a “memoran- was passed, seven months after it was first more bent on settling political scores But lately he had been severely criticized dum of joint actions” to set a timeline by the president for not moving forceful- introduced in the Verkhovna Rada. Mr. than on passing legislation to bring for budget adoption. He asked the gov- Kuchma has stated several times recently Ukraine out of its economic doldrums. ly in the battle with corruption, and for ernment to commit to submitting a draft failing to put together a passable and that he is not satisfied with the work of “Excessive politicization of the budget within constitutional terms workable budget. either the Verkhovna Rada or the Cabinet Parliament has led in the past and contin- (September 15 of the fiscal year) and for Many have also questioned his per- of Ministers. In his policy address at the ues to lead to serious faults in the legisla- the Verkhovna Rada to approve it within sonal financial dealings and his involve- National Opera House, he continued the tive process, which results in economic 60 days. ment in the often shady world of gas and criticism before government officials and loss [for Ukraine], and has resulted in an oil trading. He has been the focus of sev- foreign dignitaries who had gathered to atmosphere of constant political pay- (Continued on page 10) (Continued on page 11) 2 THE UKRAINIAN WEEKLY SUNDAY, JULY 6, 1997 No. 27 ANALYSIS Why Ukraine should be asked World Bank presses Ukraine on IMF deal The Ukrainian-Russian Friendship and Cooperation Treaty, which Mr. Yeltsin and KYIV — On his first working day, Ukrainian President Leonid Kuchma signed to join NATO in Madrid newly appointed World Bank Director for in May, was declared a major concession to Belarus and Ukraine Paul Sigelbaum by Taras Kuzio European and Trans-Atlantic structures, “Western, pro-NATO forces.” Participants warned President Leonid Kuchma on July the greater the degree of Russia’s in the congress also approved a resolution 1 that the World Bank would not be able to At the Madrid summit of NATO coun- “Europeanization.” declaring that ethnic Russians have become cooperate with Ukraine in implementing tries, the greatest changes in over half a In 1992 and 1995-1996 Ukraine a minority in Ukraine and that steps should structural reform of several sectors of the century will be made to the European rejected Russian offers to maintain joint be taken to prevent assimilation. It was pro- economy if the country failed to sign an security landscape. Three, maybe even CIS armed forces or create a CIS military posed that legislation be advanced to protect agreement with the International Monetary five countries, will be asked to join bloc, which, if supported by Kyiv, would ethnic Russians in Crimea and that the Fund.

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